18 August 2021

Implementation Of The EU Whistleblower Directive In Germany

Simmons & Simmons


Simmons & Simmons
The draft "Whistleblower Protection Act" is unlikely to be implemented before the December 2021 deadline - but companies nevertheless need to act now.
European Union Employment and HR
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In recent years, whistleblowing has received a lot of international media attention, for example in connection with #Metoo, the NSA scandal and the Panama Papers revelations. In these cases, whistleblowers uncovered legal violations and abuses by informing the authorities and the media. Without this information, it would often not have been possible to uncover such violations. Therefore, many countries have legal regulations to protect whistleblowers.

So far, there is no comprehensive and uniform legal protection of whistleblowers in Germany. Currently, only selective duties of confidentiality (e.g. in sections 116, 93 (1) sentence 3 AktG, sections 17 (1), 18 UWG) and rights of complaint (e.g. section 17 ArbSchG and sections 13, 16, 27 AGG) are regulated for individual areas. More comprehensive regulations focused specifically on whistleblowing can be found in the relatively recent Business Secrets Protection Act (Geschäftsgeheimnis - Schutzgesetz) and in the financial services sector (Financial Services Supervision Act, Finanzdienstleistungsaufsichtsgesetz). While whistleblowers are excluded from the scope of application for prohibitions of the Business Secrets Protection Act (Section 5) and consequently are not subject to sanctions (such as custodial sentences or fines), Section 4d Financial Services Supervision Act also provides comprehensive regulations on the establishment of reporting systems and the protection of whistleblowers.

According to the Federal Labour Court (Bundesarbeitsgericht), at least reporting of internal grievances to external parties, such as the press or authorities, has been considered grounds for extraordinary termination of the reporting employee under certain conditions. The European Court of Human Rights had also considered the dismissal of a whistleblower to be proportionate. Accordingly, there is no special protection against dismissal for whistleblowers.

In order to achieve a uniform legal framework for the implementation of reporting systems and the protection of whistleblowers in the EU member states, the EU has adopted the Whistleblower Directive ((EU) 2019/1937) in 2019. It must be implemented into national law by 17 December 2021. The concrete implementation of the Directive in Germany has remained controversial between the governing parties. A draft bill of the Whistleblower Protection Act (Hinweisgeberschutzgesetz) submitted by the Federal Ministry of Justice was rejected within the government at the end of April because it provided for stricter regulations than the EU Directive. According to the draft bill, whistleblowers should be protected regardless of whether they disclose violations of European or German law. Since the Whistleblower Protection Act (WPA) was not passed by the German Parliament in the last (ordinary) session week of the legislative period and there is little time left after the federal elections to get the law passed, Germany now faces infringement proceedings for late implementation.

However, since whistleblowers can directly refer to the Directive in case of delayed implementation, there is now a need of action for companies that have not yet established whistleblowing systems.

Scope of application of the Whistleblower Protection Act

The Whistleblower Protection Act is intended to cover all information on violations of legal norms in all areas of law mentioned in § 2 WPA, including not only information on already committed, unlawful violations, but also information on violations that are very likely to occur, attempts at concealment and abusive conduct. The draft bill submitted provides for an implementation which exceeds the regulations of the Directive, since not only information on violations of EU law and its concretisation in national law, but also all prohibition norms of (German) criminal and administrative offences law are to be covered by the protection of the WPA.

The personal scope of application of the WPA is intended to cover not only employees, but all natural persons who "have obtained information about violations in connection with their professional or official activities and report or disclose such information to the reporting offices provided for under this Act".

Extension of the protection of whistleblowers

The core legislative element of the WPA is to improve the protection of whistleblowers. In order to protect whistleblowers from negative consequences under labour law (such as dismissal or denial of promotion), the draft law provides for a shift in the burden of proof to the employer. If, for example, a whistleblower were not promoted or even dismissed after reporting a violation of the law, the employer would have to prove that the adverse treatment was not related to the whistleblowing but was based on other, sufficiently justified reasons. If the employer fails to do so, he would be obliged to compensate the whistleblower for the damage resulting from the adverse treatment. Careful documentation of breaches of duty is therefore essential, especially for employees who are or were also whistleblowers.

At the same time, however, the draft law also provides for a whistleblower's liability for damages in the case of deliberate or grossly negligent false information, in order to protect employers from misuse of the reporting systems.

Establishment of internal reporting systems

The Directive and the draft WPA provide for the mandatory introduction of internal reporting channels for whistleblowers in companies as part of a three-tier reporting system. In Germany, such an obligation has existed only in individual sectors to date. According to the draft of the WPA, companies with 50 employees or more are now obliged to establish internal reporting channels. The companies obliged to do so are given leeway in the concrete design of the internal whistleblowing system. The decisive factor is that the reporting office is managed by personnel trained for this purpose, who can act independently and free of conflicts of interest when deciding on how to deal with information on violations of the law. The tasks of the reporting office can therefore be carried out both internally and by third parties (e.g. lawyers).

Reports can be accepted through different communication channels. For example, external hotlines or web-based reporting systems can be considered. However, the protection of confidentiality and of the persons concerned must be guaranteed.

In addition, after receiving a tip, the reporting office must observe documentation obligations, deadlines for reporting back to the whistleblower and initiate follow-up measures such as internal investigations or submission to a competent authority.

In addition to internal reporting systems, public authorities shall act as external reporting systems. The employer shall therefore also provide information on external reporting bodies.

Internal and external whistleblowing systems are to be placed on an equal footing, so that whistleblowers are no longer obliged to use internal whistleblowing systems first. However, the disclosure of violations of the law to the media shall continue to be permissible only if there is a danger to public security and the prior use of internal or external reporting systems is out of the question.

Practical Consequences

The draft WPA in its current version would lead to a paradigm shift, as it provides for very far-reaching legal requirements for whistleblowing. With that in mind, existing whistleblowing systems should be reviewed against the background of the required implementation of the EU Directive by December 2021.

In any case, the establishment of a new reporting system should be started at an early stage. Not least because the works council's co-determination rights and data protection regulations must be taken into account.

To encourage the use of internal reporting systems, they must be transparent, easily accessible and confidential. Employers can also benefit from effective whistleblowing systems, as they may help limit economic damage and are also an important compliance tool.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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